We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
A judgment delivered on 23 April 2012 stated that in a
Settlement Agreement, inclusion of the phrase "full and
final settlement in respect of any and all outstanding
matters" was, on the facts, sufficient to exclude
liability for defects which were patent at the date of the
Settlement Agreement.
Background
Point West, a developer and landlord, and Mivan, a building
contractor, entered into a Settlement Agreement in October
2007. The Settlement Agreement was in relation to the works
carried out by Mivan on one of Point West's properties, under a
contract entered into on 22 August 2000.
The Settlement Agreement was stated to be "regarding
Mivan's Final Account in respect of all Works carried out and
any corresponding outstanding matters. The agreement
comprises a further payment of Ł50,000 (including VAT),
representing the final assessment of monies due or to become due
thus achieving full and final settlement in respect of the above
works, together with any and all outstanding
matters."
On 23 April 2012, Point West brought proceedings seeking a
declaration as to the scope of the Settlement Agreement and in
particular its impact on Mivan's liability for defects.
The declaration was granted in favour of Mivan; the Settlement
Agreement released Mivan from defects that were patent at the date
of the Agreement.
Judgment
The reasons for this decision were:
The first part of the wording of the Settlement Agreement, i.e.
that it was in respect of "all Works carried out and any
corresponding outstanding matters...[comprising] a further
payment...thus achieving full and final settlement"
achieved a financial settlement in respect of the works carried out
by Mivan and corresponding matters in relation to these works. It
was clear that, "corresponding outstanding
matters" referred to the persistent, known and unresolved
defects in the curtain walling system and the heating and cooling
system of an unknown scope and extent, of which the parties were
fully aware at the date of the Settlement Agreement, and in respect
of which further remedial work needed to be carried out. The
financial settlement was thus in respect of all Works carried out
and for remedial works in relation to these defects.
The Settlement Agreement, however, was also stated as being in
"full and final settlement in respect of the above works,
together with any and all outstanding
matters". This reference to
"outstanding matters" in the second part of the
wording was intended to take the settlement further than the
financial settlement. The combination of phrases used in the
Settlement Agreement was intended to refer to defects, which were
"outstanding matters". The Settlement Agreement
was therefore intended to form a full and final settlement in
respect of any and all outstanding defects.
This conclusion was strongly supported by the wording in the
Settlement Agreement: "this final agreement concludes
Mivan's responsibilities and obligations in respect of their
Works." That wording clearly intended to bring to
an end Mivan's responsibilities and obligations in respect of
any and all outstanding matters, including defects which were
patent at the date of the Settlement Agreement. Mr
Justice Ramsey's judgment was that the Settlement Agreement
therefore released Mivan from liability for patent defects.
Comment
The decision reached in these proceedings suggests that the
inclusion of the phrase "full and final settlement in
respect of any and all outstanding matters" in
combination with wording effecting a financial settlement has the
effect of releasing a party from all defects which were patent at
the date of the Agreement.
Importantly, however, the judgment leaves open the issue of
whether the inclusion of such a wording would release a party from
defects which were latent at the date of the
Settlement Agreement.
As such, to ensure that a Settlement Agreement will release a
party from liability for latent defects, it is
advisable to include specific wording to that effect, as it is
possible that the phrase "full and final settlement in
respect of any and all outstanding matters" may be
insufficient.
Point West London Ltd v Mivan Ltd [2012] EWHC 1223
(TCC)
Co-contributor: Rosie Gaisford
This article was written for Law-Now, CMS Cameron
McKenna's free online information service. To register for
Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance
only. The information and opinions expressed in all Law-Now
articles are not necessarily comprehensive and do not purport to
give professional or legal advice. All Law-Now information relates
to circumstances prevailing at the date of its original publication
and may not have been updated to reflect subsequent
developments.
The original publication date for this article was
06/06/2012.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Business Owners often ask whether a contract that their company is entering into can in fact take effect from an earlier date compared to the date on which it is to be signed by the parties.
The new Companies House registration regime seeks to modernise and streamline the charge registration process and a new, optional, online registration system has been introduced.
The recent case of Petroleo Brasiliero v E.N.E. Kos 1 Limited is a timely example of how the historical principles of bailment remain highly relevant today and how the law on bailment is still developing.
The attitude of the courts is shifting in favour of extending the occasions when liquidated damages clauses in business to business contracts are upheld.
After three years of consultation, new Companies House registration requirements have now come into force and apply to charges created on or after 6 April 2013 by companies and limited liability partnerships registered in England and Wales.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
